Itxa/31/2008 Of The Commissioner Of Income Tax. Iii, Pune v. Shri Madhukar B. Pawar

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL JURISDICTION INCOME TAX APPEAL NO. 31 OF 2008 The Commissioner of Income-tax-III,PMT. Building, "B" Wing, 3rd Floor,Swargate, Shankarsheth Road,Pune - 411 037. V/s. Mr. Madhukar B. Pawar,Prop. Kanchan Construction,203, Shaniwar Peth, Karad,District - Satara. ... Mr. P.S. Sahadevan for the Appellant.None for the Respondents. ... Appellant. ... Respondent. ... CORAM : F.I. REBELLO &K.U. CHANDIWAL,JJ.DATE : 25TH JUNE, 2008. ORAL JUDGMENT : (PER F.I. REBELLO, J.) : . Revenue is in appeal against the order of ITAT. The assessee had taken from seven persons aloan of Rs.20,000/- each. This is a finding of factand not in dispute. On behalf of the revenue, thelearned Counsel draws ours attention to the statutoryprovisions of Section 269 SS of the Income Tax Actwhich uses the expression "is twenty thousand rupeesor more". In other words, according to the learnedCounsel, if a person takes any loan in excess ofRs.20,000/- other than by cheque that would result inbreaching the provisions of Section 269 SS and consequently, penalty could be levied under Section 271D of the Income Tax Act. 2.as under :- From this, the question of law as framed reads "whether on the facts and circumstances of thecase in law, the penalty did not urge inholding that the provision of Section 269 SSwould not apply to the loan or deposit takenin cash of Rs.20,000/- or more and, apply onlyto the loan what would have taken in cash inexcess of Rs.20,000/-?"3.The learned Counsel for the assessee hasrelied on a Circular issued by CBDT vide Circular 572 dated 3rd August 1990. The relevant portion of which reads as under :- "43. Secs. 271C, 271D and 271E, which wereinserted in the IT Act w.e.f. 1st April,1989, by the Direct Tax Laws (Amendment) Act,1987, provide for the levy of penalties forcertain defaults. Penalty u/s. 271C islevied for failure to deduct tax at source.Penalty u/s. 271D may be levied for failureto comply with the provisions of Section 269SS i.e. for taking or accepting any loan ordeposit in excess of Rs.20,000/- otherwisethan by an account payee cheque or bank draft.Penalty under Section 271E may be levied forfailure to comply with the provisions ofSection 269T relating to repayment by acompany, including a banking company, aco-operative society or a firm, of deposits,including interest, exceeding Rs.10,000/- inthe aggregate otherwise than by an accountpayee cheque or bank draft. (emphasissupplied by me)." (emphasis supplied).It is now well settled that Circulars issuedCBDT are statutory in character and are binding on authority cannot be heard to advance an argument that it is contrary to that interpretation. The Assessing Officer could not have acted contrary to the circular. (F.I. REBELLO, J.) (K.U. CHANDIWAL,J.)